The Awesome Oscillator is the gap, in dollars, between a 5-session and a 34-session simple average of the median price. Its colors, saucers and twin peaks describe how that gap is changing; they are not forecasts.
What the Awesome Oscillator measures
The Awesome Oscillator (AO) compares recent momentum with a longer baseline. It subtracts a 34-session simple moving average of the median price from a 5-session one, so it is positive when the last week of trading has been priced above roughly the last seven weeks and negative when it has been priced below. Bill Williams introduced it in his 1998 book New Trading Dimensions.
The result is in price units, dollars per share for a US stock. A $400 stock therefore produces far larger readings than a $20 stock in a trend of the same percentage, so compare a stock’s AO with its own history rather than with another stock’s.
Awesome Oscillator calculation
Each session’s median price is the midpoint of its range. AO averages those midpoints over two windows and subtracts the long average from the short one. The first value needs 34 sessions.
Median price = (High + Low) / 2
AO = SMA(Median price, 5) - SMA(Median price, 34)SMA(x, n)- The simple average of the last n values of x.
High, Low- The session’s highest and lowest prices, in dollars.
A steady trend gives a simple result. If the median price rises by the same amount every session, the 5-session average trails the latest value by 2 sessions and the 34-session average by 16.5, so AO settles at 14.5 times the daily step: $7.25 for a climb of $0.50 per session. AO is, in effect, the trend’s pace multiplied by the gap between the two averages’ lags.
Worked example: a trend that pauses
In this hypothetical example, the median price starts at $40.00 and climbs $0.50 every session through session 34, then pauses and resumes. The table starts at session 34, the first session with both averages. Averages and AO are rounded to cents for display; AO is computed before rounding.
| Session | High | Low | Median price | SMA(5) | SMA(34) | AO | Change from previous AO | Common bar color |
|---|---|---|---|---|---|---|---|---|
| 34 | 57.10 | 55.90 | 56.50 | 55.50 | 48.25 | 7.25 | ||
| 35 | 57.40 | 56.40 | 56.90 | 55.98 | 48.75 | 7.23 | -0.02 | Falling (often red) |
| 36 | 57.20 | 56.00 | 56.60 | 56.30 | 49.22 | 7.08 | -0.15 | Falling (often red) |
| 37 | 56.70 | 55.50 | 56.10 | 56.42 | 49.66 | 6.76 | -0.32 | Falling (often red) |
| 38 | 57.00 | 56.00 | 56.50 | 56.52 | 50.11 | 6.41 | -0.34 | Falling (often red) |
| 39 | 58.90 | 57.50 | 58.20 | 56.86 | 50.58 | 6.28 | -0.14 | Falling (often red) |
| 40 | 60.50 | 59.10 | 59.80 | 57.44 | 51.09 | 6.35 | +0.07 | Rising (often green) |
| 41 | 61.60 | 60.20 | 60.90 | 58.30 | 51.62 | 6.68 | +0.33 | Rising (often green) |
At session 34 the averages are $55.50 and $48.25, an AO of $7.25, exactly 14.5 times the $0.50 step. When the median price stalls, the short average stops climbing while the long one keeps rising, so AO shrinks; when the climb resumes, AO grows again without having crossed zero.
Awesome Oscillator histogram colors explained
Most charting platforms draw AO as a histogram and color each bar by its change from the previous bar, not by its sign. A bar higher than the one before gets the rising color, often green, and a bar lower than the one before gets the falling color, often red, whether the bars sit above or below zero.
So a red bar above zero means AO is still positive but shrinking, and a green bar below zero means AO is negative but less negative than before. The last column of the worked example labels each bar this way. Color conventions are a platform setting, so check the legend before reading colors.
Awesome Oscillator zero line crossover
AO crosses above zero when the 5-session average of the median price rises above the 34-session average, and below zero when it falls under it. The crossover is the same event as a crossover of those two moving averages. In a steady trend it arrives late, because the 34-session average responds slowly; in a sideways market it can repeat often.
The saucer explained
Williams described three setups for the oscillator: the zero line crossover, the saucer and twin peaks. A saucer is a three-bar shape that stays on one side of zero. In the bullish form, AO is above zero, two consecutive bars fall and the next bar rises, so momentum dipped and turned back up without the averages crossing. The bearish form mirrors it below zero: two rising bars followed by a falling bar.
The worked example contains a bullish saucer at sessions 38 to 40: AO is positive throughout, falls at sessions 38 and 39, and rises at session 40. The shape records that momentum paused and resumed. Whether it continues is a separate question that the pattern does not answer.
Twin peaks explained
Twin peaks compare two swings on the same side of zero. In the bullish form, AO is below zero and forms two troughs, the second shallower than the first, with the histogram staying below zero between them; the first rising bar after the second trough completes the shape. The bearish form uses two peaks above zero, the second lower than the first.
If the histogram crosses zero between the two swings, the comparison no longer holds and the count starts over. Twin peaks are a divergence inside the oscillator: momentum was weaker on the second swing. Check price over the same sessions to see whether it made a matching new low or high.
How to read the Awesome Oscillator on a stock chart
Read AO from the zero line outward. First note which side of zero it is on, which says whether the 5-session average is above or below the 34-session average. Then use the bar colors to see whether that gap is widening or narrowing, and finally look for the shapes described above and compare them with the price bars of the same sessions.
- Large readings follow large trends in dollars; compare them with the stock’s own past readings.
- A shrinking positive histogram often appears during pauses in an advance, not only near turning points.
- The illustration in this guide shows a pause that keeps AO above zero, a renewed rise and a later cross below zero as price declines.
- Add a view of the longer trend, such as a 50-session moving average, before drawing conclusions.
Limitations of the Awesome Oscillator
AO is a fixed recipe, and each ingredient brings a trade-off. These limits apply on every bar size.
- Fixed windows: the 5- and 34-session lengths were chosen by its author, and other lengths change every reading.
- Lag: the 34-session average responds slowly, so zero crossings come well after turns.
- Price units: readings scale with the share price, so thresholds do not transfer between stocks.
- It uses only highs and lows, ignoring the close and volume.
- Saucers and twin peaks appear often in sideways markets, where they describe noise as readily as momentum.
Sources
- Bill Williams, New Trading Dimensions (Wiley, 1998)
Read our data and methodology notes for calculation context. This guide explains research tools and observations. It does not recommend a trade or investment.